The Consumer’s Advocate: Protecting the Consumer Financial Protection Bureau
Nana Adjeiwaa-ManuNana Adjeiwaa-Manu is a former Research and Writing Fellow at the Center for Global Policy Solutions. She is interested in identity, social support systems, and the connection between health and wealth. Nana holds a bachelor's degree in Sociology and African & African-American Studies, and will be pursuing a Ph.D. in Sociology this fall. You can follow her on Twitter @AdjeiwaaKodyie.
The Consumer Financial Protection Bureau (CFPB) is the consumer’s advocate. In October 2015, the CFPB proposed a rule to amend Regulation C and the Home Mortgage Disclosure Act (HMDA). The rule, scheduled to take effect in January 2018, would change the processes for reporting data, the types of data that financial lenders are required to collect, and the institutions and transactions that would be required to follow the regulation.
Under this new regulation, lenders must report whether they collected race, ethnicity, and gender information about applicants or borrowers by “visual observation or surname when an applicant chooses not to provide the information for an application taken in person.” This regulation helps lenders remain accountable to the Bureau about how they assess loan applicants.
The data this regulation produces will have wide implications, showing how lenders judge loan applicants – either favorably or unfavorably – and if factors like an applicant’s appearance or a loan officer’s own internal bias come into play. While the data from the regulation will not provide specific reasons why minorities, for example, are more likely to be denied home loans, it may be the first step toward achieving more equitable lending practices.
Further, the rule states that institutions must allow applicants to self-identify their ethnicity and race using disaggregated ethnic and racial subcategories. Institutions will report the disaggregated information that applicants provide, and they cannot use the disaggregated subcategories if they identified applicants’ race and ethnicity based on visual observation or their surnames. This regulation implies that disaggregated data will be able to provide useful information about equity in home lending practices.
In January 2017, the Trump administration almost immediately issued a regulatory freeze that suspended government bureaus from issuing any new regulations for 60 days. This will impact the CFPB’s ability to propose and implement rules that put consumers first.
The CFPB is under attack, and its work to ensure fair lending practices for all consumers is crucial to a more inclusive market. Putting a freeze on its activity only hurts consumers.